British Eurosceptics have rushed to ascribe Ireland’s crisis to the euro, and to see in it impending disaster for the single European currency. In truth, this is just wishful thinking, blended with schadenfreude.
The euro had nothing to do with Ireland’s property boom and bust, which is what has brought its banks and economy so low: membership in 1999 did lower Irish borrowing costs, but it also did so for plenty of others who didn’t have housing bubbles and who, unlike the Irish Government, took the trouble to regulate their banks properly. Iceland’s similar banking crisis in 2008-09 shows that Ireland would have been in just as much difficulty outside the euro, except that a currency crash would have made it bankrupt even sooner, and the IMF would still then have been called in.
Nor is it at all obvious why Ireland’s current troubles should put the euro in danger of collapse. As long as governments in the eurozone have the political will to stage financial rescues when other member states get into difficulty, the currency will survive. They showed in May, when they assembled a huge financial rescue facility, in that case for Greece, that the will is there.
Another danger point would come if countries appeared to be tempted to leave the euro and reintroduce drachmas or punts, for then speculation would begin as to who would be next. But there has been no sign of that, given that the costs of withdrawal would be very high.
It wasn't the drink that made him drunk, Officer, he just ate a dodgy kebab. A touch more of the whiskey will settle his stomach, purely medicinal.